VINCE CABLE INTERVIEW: 'It's time to help small and medium firms and act on rising London house prices'

Vince Cable has no power to dictate the Chancellor’s Budget – however much he might like to – but there is no doubting his message to George Osborne on the key issue of funding Britain’s vital small and medium companies.

The Business Secretary last week gave his support to a report calling for tax breaks that could make it easier for such firms to raise equity finance by abolishing stamp duty on share transactions.

So is this likely to make an appearance in next month’s Budget? ‘Look, I don’t set the Budget and I’m conscious that the Chancellor will need to create a Budget that’s tax- neutral, not a tax giveaway,’ he says.

Time to act: Vince Cable says small firms need help to become as competitive in their fields as Nissan is in Sunderland

‘But the report was pointing out that despite all the things done over the years, middle-sized growth companies in particular continue to have enormous problems getting access to loan and equity finance. That’s the challenge we’ve got to address.

‘There are areas where the Government has already signalled it would like to move, such as AIM-listed companies’ shares being incorporated in Isas so you have a slightly higher-risk product while backing British growth companies.

‘Anything that can be done within our budget constraints to boost these companies is what we want.’

Unsurprisingly, Cable, 69, backs Labour leader Ed Miliband’s announcement last week that he would reintroduce the 10p rate of income tax - abolished by Gordon Brown in 2007 – and fund it with a mansion tax on properties worth £2 million or more.

He says: ‘I originated the concept of mansion tax and Labour didn’t do anything about it while in office. There is a growing argument for having some form of taxation on very high levels of wealth. It’s outrageous that someone in a small suburban semi is paying the same council tax as some billionaire who lives in a £10 million or more property.

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‘We have a lot of overseas people buying property in London and driving up prices and it’s creating a market in which British families, even quite prosperous ones, can’t afford property.

‘It is time for the Government to act on rising house prices in London and this is one way of doing it.’

But Cable would rather see the income tax threshold raised than a 10p banding reintroduced.

‘Raising the tax threshold has similar effects to the 10p rate, but helps people, mostly relatively low-paid women, to get out of the tax system altogether with all of the benefits that entails,’ he says. ‘It is a more powerful way of doing what Miliband is proposing with the 10p tax rate.’

So what about the wider economy? Does Cable believe we are on the road to recovery and are exports key to driving this?

‘Up to 2010 there was a long period in which British exporters had become seriously uncompetitive,’ he says.

‘There was a kind of mentality that it was easier to sell into the home market where there was a lot of consumption fed by debt and we neglected the big emerging markets.

‘Trade performance statistics show that until about a year ago in emerging markets we were being outcompeted in some cases by Italy, let alone France and Germany.

‘Some companies were doing very well, but the medium-sized companies in particular were not competing the way the Germans were. Since the devaluation of sterling, we have seen evidence of considerable improvement in most of those markets.’

Cable fiercely denies that Britain has become less attractive to large companies, in the wake of Ford, Renault and Nissan expanding to Spain, and Ford closing its Southampton plant.

‘There are clear positive signals for manufacturing in general and specifically there are some great success stories,’ he says.

‘Unlike the rest of Europe, car output is rising in the UK. Ford has closed Southampton but made the UK its global centre for engine production, while Nissan in Sunderland is now producing more cars in its factory than any British carmaker has ever made in any European factory.’

Cable has been vociferous about the need to clean up high street banks. Does he believe they have fully accepted their role in the many mis-selling scandals?

‘I think they are getting there,’ he says. ‘I take comfort from Antony Jenkins’ comments and I think there is a new mood.

‘Barclays is a good example because it’s a bank whose reputation has been trashed as a result of what they did, but it’s faced up to that and set a new direction. Hopefully they will follow through.’

However, when it comes to the mis-selling by the banks of interest rate swaps, which hit tens of thousands of smaller companies with huge bills, Cable warns that there is ‘far more to be said’.

‘I’ve been working closely with the Federation of Small Businesses and the campaigning group Bully-Banks and they are right to be angry,’ he says. ‘We still haven’t seen the full scale of the problem. Officially, 40,000 firms have been affected but in reality it’s probably 100,000.

‘The Financial Services Authority has been firm on the need for redress, but there is far more to be done.’